Taxpayers’ cash ‘funding corrupt deals’

The UK’s “File on 4” explores claims of corruption that have surfaced over several projects backed by the UK government’s Export Credits Guarantee Department.

A secretive government department is using taxpayers’ money to underwrite questionable overseas deals, a File On 4 investigation has found. Earlier this year ministers introduced tough new rules to ensure UK firms would not pay bribes.
UK firms using bribes to win
contracts abroad risk prosecution

But claims of corruption have surfaced over a series of projects backed by Whitehall’s Export Credits Guarantee Department – which underpins British contracts abroad.

Allegations have surfaced that a Nigerian gas project which got a £127m guarantee from the ECGD has a “slush fund” linked to it which has paid out money to local officials and to executives of the companies involved.

In 2002 the EGCD gave its backing to British-based firm MW Kellogg to help build a new gas plant at a place called Bonny Island in Nigeria.

MW Kellogg, now a subsidiary of American corporation Halliburton, was part of a consortium which won the $10bn contract for the plant.

Although the project looked like it would be a financial and environmental success, there was a lot of scepticism in Nigeria at the time that it could ever be set up without some form of bribery.

Patrick Smith, editor of foreign affairs journal Africa Confidential which followed the story closely, said: “There were stories that senior officials in the military had demanded some sort of kickback.

Swiss bank accounts

“And I spoke to the oil minister who told me someone rang him up and said: ‘My name is London Weather. We will set up an account for you, and every time I put money in it i will tell you that London Weather is calling.'”

Details of the fund are contained in a series of contracts and other documents which have been seen by File On 4.

They suggest that executives of MW Kellogg persuaded the gas consortium to buy “consultancy” services from a Gibraltar-based company called Tri-Star.

Tri-Star was to be paid around £100m, through bank accounts in Switzerland and Monaco. It is still not clear where most of the money went, although a large amount has been frozen in a Swiss bank account.
The gas plant was built on Bonny
Island in South-East Nigeria

The man behind Tri-Star, a solicitor named Jeffrey Tesler, who has not responded to questions from File On 4 journalists.

But a judge in Paris investigating a French company involved in the gas plant project says Mr Tesler admitted to him that he had received enormous amounts of money.

He also acknowledged making payments to a senior Nigerian official and to consortium executives but insisted these were for legitimate purposes.

Executives sacked

Judge Renaud van Ruymbeke told File On 4 that the Serious Fraud Office in London was helping with his investigations into the Bonny Island allegations.

But he also voiced concerns over Britain’s attitude to tackling corruption.

“Myself and other judges in Paris, Switzerland and Luxembourg have a lot of difficulties with co-operation from the UK and for several years we didn’t know how to progress.”

In America, MW Kellogg’s parent company Halliburton has sacked two of its executives, and has told the financial authorities that it has found evidence pointing to bribes being paid.

Halliburton told File On 4 that it took the issue of corruption extremely seriously.

Earlier this year, the ECGD brought in new rules which meant in future cases, companies would have to give detailed information about agents such as Jeffrey Tesler.

But a few weeks ago, after the CBI led fierce lobbying against the new measures, ministers announced that compnaies would no longer be required to investigate before declaring they knew of no plans to pay bribes.

The Parliamentary Trade and Industry Committee is now planning to question ministers about the Bonny Island allegations and about why they have just watered down their anti-corruption rules.

Britain ‘soft touch’

The committee chairman, Martin O’Neill, said: “The government went ahead with a very ambitious set of objectives to introduce an ethical dimension into business practice – and by November they had reversed them.

“It gives a message to other countries that Britain might be a softer touch than they had anticipated.”

The ECGD told the programme that its anti-bribery and corruption procedures remain amongst the most rigorous in use among leading international export credit agencies.

It said in a statement: “Companies that engage in corrupt activity in relation to a contract insured by ECGD will have their insurance voided, and we will seek repayment of any claims we have paid out.”

For a full transcript, please see:

File on 4: BBC Radio 4, November 30, 2004

Categories: Corruption, Odious Debts

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